What You didn't Know Between Freehold and Leasehold Land

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What is the Difference Between Freehold and Leasehold kinds of property in Kenya and which one should you buy?
There are like five main differences that I am going to give, but first things first, let's define what is freehold and what is leasehold.

Freehold is a type of property where the ownership underlines the land is without restriction on either the use and the number of years you can hold it. So basically, you can have it for as long as you want it, as many years as you want.

So what are these differences, I will go step by step to explain to you so that you can decide for yourself which one you will like to buy?

1. Ownership- The ownership for freehold is indefinite and doesn't require any renewal but for leasehold, you have to extend, basically you have to renew the lease after 99 years. There are less payable every year, depending on the county and jurisdiction or the city. SO you have to keep paying. If you are buying a leasehold, you have to check that the previous owner paid all the rates as part of due diligence.
2. Finance- If you have a prime property, where the bank accepts it for financing. The bank will most likely accept freehold as compared to leasehold. If it meets their conditions of whether it is prime or not. Most banks will not take maybe agricultural pieces properties because it is in remote areas.

But there is a friend of mine who was buying an apartment and they were taking a mortgage. They wanted a 20-years mortgage, They could not get it because the number of years remaining in the lease was less than 15 years at that point in time, so they got 10 years instead. So that was a setback to them.
If this property was freehold, they could have gotten 20 years. But I would also tell you, as a matter of fact, most properties that are very prime are leasehold. So you will have to be guided by the need first. If it is a leasehold, there is a certain process that you have follow, you have to pay the rate, you have to renew, and stuff like that, you have to consider the duration of time remaining.

3- Development control- You will find for leasehold properties, the process is longer for development control. of course, you will have to pay the rates, you have to check the number of years that are still remaining, the lease when you are doing this development. The process is more tedious. its my take so long as compared to the freehold kind of land.
4. Selling- It is easier to sell freehold property than leasehold property because for a leasehold property as part of due diligence, you have to check the number of years remaining, you also need to check the previous owner had paid the requisite rate that are required depending on the jurisdictions. So you will have for freehold, which we prefer as username investment when we are buying land. Most of our land 99.9% at the moment is
freehold kind of land, you don't need to pay rate. It is so easy for people, especially if you are in diaspora, you don't need to keep remembering to pay the rate. But I also want to warn you, based on the county the land is, they introducing rates even on freehold land that you have to keep paying.
4., Process Involved- The process involved for leasehold. For freehold, you don't need to renew every year, for leasehold, you have to keep renewing every year. So the process involved in purchase is much easier. The renewal of the lease is tedious, sometimes, it is prone to political interference just like the Delmonte case. For leasehold kind of land, comes with conditions for development. Maybe you suppose a hospital, a school, apartment por block or a commercial block or properties. If you don't do that, those are fertile grounds for the lease not to be renewed. If you have done that, most likely your lease will be renewed.
Those are the comparisons, and I will like to remind you once again, to be guided by the need of the property. If you find a property that meets your needs and it is leasehold, you just need to follow the process required. Check the number of years remaining. Check the previous owner, he has paid all the requisite rates.